Indian shares climbed yesterday rebounding from their earlier decline as traders covered their short positions and Asian markets rose. Both the benchmark equity indices, the Sensex and Nifty, jumped 1.9% each, the maximum daily gains in at least five months.
Financial and industry stocks led the rally.
The BSE’s 30-share Sensex closed 1.89% or 520.91 points higher at 28,050.88 points, while National Stock Exchange’s (NSE) 50-share Nifty climbed 1.85% or 157.50 points to 8,677.90 points.
“A pullback in US dollar whetted global risk appetite, sparking rallies in currencies, commodities, and global equity markets.” said Anand James, chief market strategist, Geojit BNP Paribas Financial Services.
The rally occurred amid the uncertain fate of India’s most ambitious tax reform, the goods and services tax (GST). Over the next three days, deliberations of the GST Council, most of which are expected to be contentious, will determine whether the country can stick to the April 1 deadline for the roll-out of the tax.
All the sectoral indices closed in the green. The BSE Finance index and the BSE Bankex led gains among sectoral indices with a 2.55% and a 2.4% rise, respectively.
“There is continued optimism on the banking side that the non-performing asset issue will get resolved after Essar Rosneft deal”, said Dipen Shah, head of private client group research at Kotak Securities. “Apart from this, we expect that the earnings seasons will be better as compared to previous quarter.”
Twenty-eight of 30 Sensex stocks closed higher. Adani Ports & Special Economic Zone jumped 6.3%, the maximum gain in two months. ICICI Bank climbed 4.6% to Rs.270.40 a share, a level last seen on 23 September. The stock gained for three straight sessions and rose over 12.11% during this period.
Provisional data from NSE suggested that foreign institutional investors (FIIs) bought a net of Rs345.04 crore yesterday, while domestic institutional investors (DIIs) bought a net of Rs173.36 crore of local shares.
Year to date, FIIs have been net buyers of $7.42bn of shares, while DIIs have pumped in a net of more thanRs4,024 crore in domestic equities.
Meanwhile the rupee yesterday closed stronger against the US dollar, tracking gains in the domestic equity and Asian currencies markets.
The rupee closed at 66.73 against the US dollar, up 0.24% from its previous close of 66.89. The home currency opened at 66.79 a dollar and touched a high of 66.67 a dollar—a level last seen on October 10. So far this year, it fell 0.8%.
Asian currencies closed higher as dollar weakens for second day with data overnight pointing to weakness in US manufacturing. Philippines peso was up 0.82%, South Korean won 0.76%, Taiwan dollar 0.73%, Thai Baht 0.69%, Malaysian ringgit 0.61%, Indonesian rupiah 0.34%, Singapore dollar 0.27%, China Offshore 0.07%. However, Japanese yen was down 0.08%.
Since October 3 to October 14, FIIs sold $989.30mn in debt and so far this year they have sold $728.40mn. The benchmark 10-year government bond yield closed at 6.722% compared to Monday’s close of 6.748%. Bond yields and prices move in opposite directions.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 97.734, down 0.16% from its previous close of 97.888.
Traders are also cautious ahead of the Chinese economic data on industrial production, retail sales and gross domestic product that are all due today after a report last week showed the China’s exports unexpectedly dropped in September, according to a Bloomberg report.